The Financial Services Compensation Scheme announced today that some London Capital & Finance investors may have claims which will be covered by the FSCS.
The FSCS has stated:
Following an extensive review of LCF’S business practices, we believe that Surge Financial Ltd, acting on behalf of LCF, provided a number of LCF clients with misleading advice. As this is a regulated activity, it means that FSCS protection would be triggered and that there may therefore be a number of customers with eligible claims for compensation.
A few weeks ago I commented on the case of Nutmeg, which contacted its customer base to encourage them to invest in Nutmeg itself via crowdfunding platform CrowdCube.
Given that Nutmeg offers medium-risk fund solutions to inexperienced investors (more experienced investors would generally prefer a cheaper DIY platform), it is doubtful how much intersection there is between its customer base and wealthy, highly risk-seeking individuals for whom venture capital investment in loss-making startups is a suitable investment.
Nutmeg was the third fintech firm by my count to do so, following challenger bank Monzo and savings app Chip.
With the Financial Conduct Authority apparently happy for fintech firms to tap up their customer bases for investment, two more firms have joined the party in recent weeks, namely MoneyDashboard (an "open banking" service which displays all of your savings and debts in one place) and WeSwap (a currency exchange service).
In a much anticipated showdown with the Treasury Select Committee, FCA head Andrew Bailey made extensive use of the Glenn Beck Device.
Bailey admitted that the FCA had intervened a total of five times over London Capital & Finance over its misleading financial promotions, but feigned confusion over why the company continued to take in inexperienced retail investors' money in defiance of the FCA's insipid bleating. Almost all of which now appears to be lost.
Prime ISA Limited has used a loophole in the Companies Act to delay filing its annual accounts.
Prime ISA offered IFISA bonds paying 7% per year (although its literature was contradictory on this point), the proceeds of which were to be used to refurb a data centre.
Surge Financial CEO Paul Careless was arrested yesterday and questioned for four and a half hours, the Evening Standard has revealed.
Surge Financial was London Capital & Finance's marketing agent. Another company in the Surge network, RPDigitalservices, which was controlled by Careless from July 2018 to April 2019, ran the top-isa-rates and best-interest-rates websites which channeled investors to London Capital & Finance using misleading comparisons between FSCS-protected deposit rates and LCF's high-risk rates.
The company formerly known as Adelpha Bond PLC, which previously issued unregulated bonds paying up to 7.6% per year, has converted from a public limited company to a private limited one.
At the same time, it has extended its accounting period by five months (one shy of the maximum permitted).
Whereas Adelpha was previously required to file its first annual accounts by November 2019 (six months after the conclusion of its first year), the extension and conversion to a private limited company means it now has until July 2020 (nine months after the new accounting end date).
The Times of London has revealed that of the £60 million commission paid by London Capital & Finance to its marketing agent Surge, £26 million was spent on marketing, of which £20 million went to Google.
Google was paid more than £20 million to promote high-risk mini-bonds for London Capital & Finance, the collapsed investment firm at the centre of a fraud investigation.
The Times has learnt that Surge Group, a digital marketing firm that was contracted by LCF to raise capital from investors, used the bulk of the money it spent on marketing to buy advertising via the search engine giant.
A person close to the matter said Surge spent about £26 million on marketing for LCF between 2015 and last year, with about 90 per cent of that sum going to Google.